Inflation still high, says RBI governor Raghuram Rajan

 Ahead of the policy review by month-end, Reserve Bank Governor Raghuram Rajan has said that inflation is still high. "... but inflation still remains high on supply-side rigidities," Rajan was quoted as telling a conference in Boston, USA, by the organisers Citi. Rajan has hiked rates thrice in his year-long stint as the central bank Governor and continued to maintain the rates at high levels despite pressure from the pro-growth lobby.

The government too has taken a slew of measures to ease the supply-side constraints, especially to curb hoarding. RBI will announce the bi-monthly review of the policy on September 30. Rajan singled out food inflation as a growing concern in his speech last night.

"Food inflation is a source of discomfort and given the sub-par monsoon this year, there is a need to keep an eye on food inflation," he said. It can be noted that the sown area for thekharif crop has fallen 3.2% due to the lower rainfall. Rajan said fall in inflation to current 8% from a high of 11.2% in November 2013 was due to monetary tightening, fiscal consolidation and food management policies. RBI is aiming to contain the headline number at 8% by January 2015, and bring it down further to 6% by January 2016.